Fitch Ratings has downgraded and removed from Rating Watch Negative three classes of J.P. Morgan Chase Commercial Mortgage Securities Corp., commercial mortgage pass-through certificates, series 2002-CIBC4 (JPMC 2002-CIBC4).
In addition, Fitch has affirmed eight classes of the transaction. A detailed list of rating actions follows at the end of this press release.
The downgrades reflect an increase in Fitch expected loss for the pool, primarily associated with the impending resolution of the largest asset, which is real-estate owned (REO) and represents 53.2% of the pool, as well as the recovery of the associated servicer advances. Fitch modeled losses of 54.2% of the remaining pool; modeled losses including realized losses to date are 11.8% of the original pool.
As of the July 2012 distribution date, the pool's certificate balance has been reduced by 85.6% (to $114.7 million from $798.9 million), of which 81.6% was due to paydowns and 4% was due to realized losses. The pool is concentrated with 19 loans remaining. One loan (2%) has been defeased. Interest shortfalls totaling $5.2 million are currently affecting classes E through NR.
Fitch has designated 10 loans (88.4%) as Fitch Loans of Concern, which includes four specially serviced loans (59.9%).
Significant losses are expected from the imminent sale of the REO asset, which consists of 487,170 square feet of a 1.12 million square foot regional mall located in Austin, TX. The property is under contract to be sold at a significant discount to the outstanding loan balance and is expected to close this month. The master servicer has indicated it plans to withhold all principal and interest proceeds until approximately $8.3 million of advances relating to this loan is recovered. Fitch believes this will take approximately 18 months to occur and in the interim, no certificates will receive interest or principal.
The loan originally transferred to the special servicer in June 2009 for imminent default related to tenancy issues and became REO in May 2010. Subsequent tenant litigation issues and new competition caused a sharp decline in the property's performance. In addition, land that was originally owned and occupied by the mall anchors was sold to a community college, which caused a sharp decline in the property's value.
While the class B is currently expected to recover its entire current balance of $2.6 million, it's difficult to gauge the amount of interest shortfalls given the uncertainty in timing of the ultimate recovery of servicer advances. The Evolving Rating Outlook on class B reflects this uncertainty. Fitch will monitor the pace at which advances are recovered over the next one to two years. The original rating on the class B was 'AA'.
Fitch has downgraded, removed from Rating Watch Negative, and assigned Rating Outlooks to the following classes, as indicated:
--$2.6 million class B to 'BBBsf' from 'AAAsf'; Outlook Evolving; |
--$34 million class C to 'Bsf' from 'Asf'; Outlook Negative; |
--$10 million class D to 'CCCsf' from 'BBB-sf'; RE 100%. |
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Additionally, Fitch has affirmed the following classes: |
--$24 million class E at 'Csf'; RE 0%; |
--$12 million class F at 'Csf'; RE 0%; |
--$14 million class G at 'Csf'; RE 0%; |
--$12 million class H at 'Csf'; RE 0%; |
--$4 million class J at 'Csf'; RE 0%; |
--$2.3 million class K at 'Dsf'; RE 0%; |
--$0 class L at 'Dsf'; RE 0%; |
--$0 class M at 'Dsf'; RE 0%. |
Classes A-1, A-2, A-3, and X-2 have paid in full. Fitch does not rate class NR.
Fitch had previously withdrawn the rating on the interest-only class X-1. (For additional information on the withdrawal of the rating on the interest-only class, see 'Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities', dated June 23, 2010.)
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21, 2011);
--'Criteria for Rating Caps in Global Structured Finance Transactions' (Aug. 2, 2012).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662869
Criteria for Rating Caps in Global Structured Finance Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684737
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Melissa Che,
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